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Harrah's CEO: From Harvard to Vegas

By Chuckmonster on Saturday, 9th April 2005 3:33pm
  » filed under Las Vegas  comments: 0

   

If you fly into the Las Vegas airport, grab a cab and ask the driver to take you to the town's most fabulous casino, you might arrive at the door of Mandalay Bay, which has a giant shark aquarium, the best pool and classy restaurants like Aureole. Or maybe you'll wind up throwing dice at the Palms, where Paris Hilton and Britney Spears party regularly. But the odds are surely slim that you'll find yourself at Harrah's, a slender and unimaginative casino-hotel, whose 2,530 rooms haven't changed much since its days in the 1970s as a Holiday Inn. Harrah's is strictly a midmarket gambling parlor, more apt to lure in gamblers who—lose perhaps $200 an evening than the high rollers who bet thousands per hand. Yet where casino aficionados see an appalling lack of style, Wall Street sees a lot to love. For, despite its lack of trimming and trappings, Harrah's management team has turned the company into a profit machine.

Credit for that goes to Gary Loveman, an MIT-trained economist who's emerged as the gaming industry's unlikeliest high roller. Loveman, 44, spent four years at Harvard Business School teaching M.B.A. students how service companies like Wal-Mart and Taco Bell boost profits. Much of his work focused on a seemingly simple lesson: that businesses need to identify their most profitable customers and get them to shop more often. To test his theories for how to do that, in 1998 he left Harvard to become chief operating officer at Harrah's, the Las Vegas-based casino company. In 2003 he became CEO. Since arriving in Las Vegas, he's lured mathematicians and computer jocks to help him create a high-tech marketing program that tries to perfectly match the perks they offer frequent gamblers with those customers' idealized preferences. Their efforts are paying off: last year alone Harrah's stock jumped by one third.



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